External risks weigh on foreign capital pouring into Vietnam’s stock market

Foreign investors’ trading on exchanges and net injecting/withdrawing value from the exchange-traded funds (ETFs) has a high correlation with a usual lag of one month. 

External risks weigh on foreign capital pouring into Vietnam’s stock market

Hence, although the trend of money withdrawal by foreign investors has not shown any sign of ending, it is expected there will be less selling pressure in October.

Although Vietnam macroeconomic indicators paints a great picture to draw foreign capital, external risks remain high that could significantly impact the foreign capital inflow to the country’s stock market, according to Viet Dragon Securities Company (VDSC). 

Risks include slowdown of US economy. The US ISM manufacturing index reached only 47.8 in September, the lowest reading in ten years. Hence, the market has placed more bet of another rate cut in late October.

In addition, trade friction has negatively impacted market sentiment. Although the US and China will have an upcoming meeting on October 10, recent comments from President Trump criticizing China during a UN speech and US considering to delist Chinese companies from US stock exchanges are key risks. The Brexit story has not directly impacted the Vietnam stock market in recent months. However, a no-deal Brexit can negatively impact global sentiment and eventually Vietnam. 

External risks weigh on foreign capital pouring into Vietnam’s stock market

As a result, exchange traded fund (ETF) flows can continue to be disrupted. ETF funds net withdrew nearly US$12 million in September, which was remarkably lowered compared to US$50 million in August. According to VDSC’s observation, foreign investors’ trading on exchanges and net injecting/withdrawing value from the ETFs has a high correlation with a usual lag of one month. Hence, although the trend of money withdrawal by foreign investors has not shown any sign of ending, it is expected there will be less selling pressure in October. 

All of the big ETF funds were net sellers in September were Vaneck (- US$1.6 million), FTSE (-US$3.7 million), KIM (-US$4.5 million) and VFMVN30 (-US$3.8 million). Meanwhile, the money pumped into the new fund Premia was moderate (US$1.4 million).

 

Foreign investors’ net selling in the Ho Chi Minh City Stock Exchange (HoSE) reached VND1.17 trillion (US$50.43 million) in September, the third highest value since the beginning of the year, of which the exchange-traded funds (ETFs)’ portfolio restructuring day accounted for over VND600 billion (US$25.86 million). However, unlike the two previous months when the market significantly went down due to selling pressure from foreign investors, the VN-Index in September still increased by 1.3% thanks to the support from domestic money.

Nevertheless, VDSC expected earning results from some leading stocks in sectors that had strong growth the first half of 2019, such as banking, real estate, and retail will continue to have healthy revenue and profit in the third quarter. The forecast came from the back a sound domestic macroeconomic outlook. 

Vietnam macroeconomy continued to be positive as its GDP reached 6.98% year-on-year after the first nine months of 2019, the highest number in nine years. Inflation was 2.5%, lower than the government target of 4%. Registered and disbursed FDI saw a strong increase in September, 47% and 60% month-on-month, respectively

According to VDSC, as earning results in the second quarter impacted significantly stock prices movement in July. Hence, it is expected the market can rise thanks to the brokerage’s positive forecasts for earnings in the third quarter.

Strong earning results may increase the probability of surpassing the 1,000-threshold for Vietnam’s benchmark VN-Index. However, “it is quite challenging for the VN-Index to maintain this level as there could be low or no support from foreign capital in October,” stated VDSC. Hanoitimes 

Hai Yen

Industrial real estate thrives on FDI increase

Industrial real estate thrives on FDI increase

Existing factors in the market, especially strong FDI inflow, all are supporting the prosperity of the industrial real estate market.

Vietnam considers new strategy on FDI

Vietnam considers new strategy on FDI

Southeast Asia including Vietnam have emerged as destinations for investors in the reallocation of investment flow, especially capital flow from China.

 
 

Other News

.
Govt’s new decree removes barriers to automobile imports
Govt’s new decree removes barriers to automobile imports
BUSINESSicon  19/02/2020 

Automobile importers in Vietnam will no longer have to obtain a Vehicle Type Approval (VTA) certificate from authorities in exporting countries, making it easier for them to import cars into the country.

VN investment inflow below expectations after CPTPP
VN investment inflow below expectations after CPTPP
BUSINESSicon  19/02/2020 

A year since the CPTPP came into force, trade between Viet Nam and other members of the trade deal had posted significant gains, but the potential to expand remained large, according to the Ministry of Industry and Trade.

VN central bank makes net cash withdrawal amidst high inflation pressure
VN central bank makes net cash withdrawal amidst high inflation pressure
BUSINESSicon  19/02/2020 

The State Bank of Vietnam made a net cash withdrawal worth VND86 trillion out of the economy through open market operations (OMO) from January 20 to February 14.

Real estate businesses ask VN Government to remove difficulties
Real estate businesses ask VN Government to remove difficulties
BUSINESSicon  19/02/2020 

The Vietnam Real Estate Association (VNREA) will next month propose solutions to Prime Minister Nguyen Xuan Phuc to remove difficulties in administrative procedures, capital and cut loan interest for real estate businesses.

Farm produce prices slump as Covid-19 hits exports
Farm produce prices slump as Covid-19 hits exports
BUSINESSicon  19/02/2020 

The suspension of trade in seafood and agriculture products at some northern border gates with China as a measure against the novel coronavirus (Covid-19) has caused a demand-supply imbalance in the market.

PM tells sugar firms it's time to sink or swim
PM tells sugar firms it's time to sink or swim
BUSINESSicon  19/02/2020 

The sugar industry will have greater development opportunities if it can re-organise itself more effectively, Prime Minister Nguyen Xuan Phuc said at a meeting on Tuesday.

FDI in Vietnam expected to surge after the epidemic
FDI in Vietnam expected to surge after the epidemic
BUSINESSicon  19/02/2020 

 As a major foreign investment hub, China is hit hard by the new strain of coronavirus, now known as Covid-19, but this also provides an opportunity for other countries to accelerate efforts to attract new foreign investment.

Van Don approved to develop into entertainment hub with casino
Van Don approved to develop into entertainment hub with casino
BUSINESSicon  19/02/2020 

Prime Minister Nguyen Xuan Phuc has approved Van Don District in the northern province of Quang Ninh as a multisectoral sea economic zone and entertainment hub that will include a casino.

Covid-19 takes toll on small, large firms
Covid-19 takes toll on small, large firms
BUSINESSicon  19/02/2020 

The novel coronavirus, now officially named Covid-19, has dealt a blow to both small and large firms.

Coronavirus hits supply chains of U.S. firms in Vietnam: AmCham Survey
Coronavirus hits supply chains of U.S. firms in Vietnam: AmCham Survey
BUSINESSicon  19/02/2020 

A number of U.S.-invested firms in Vietnam suffering supply chain complications have deep concerns about the economic impact of the novel coronavirus, or Covid-19, a survey of American Chamber of Commerce (AmCham) members indicated.

Coronavirus may lower Vietnam’s State budget by VND42.3 trillion: ministry
Coronavirus may lower Vietnam’s State budget by VND42.3 trillion: ministry
BUSINESSicon  19/02/2020 

The State budget may face a shortfall of some VND42.3 trillion (US$1.8 billion) this year due to the ongoing spread of the novel coronavirus, or Covid-19, according to the Ministry of Planning and Investment.

Le Hoang Diep Thao no longer Trung Nguyen shareholder
Le Hoang Diep Thao no longer Trung Nguyen shareholder
BUSINESSicon  19/02/2020 

Dang Le Nguyen Vu, founding chairman and general director of Vietnamese coffee giant Trung Nguyen Group, has bought all the group shares held by his ex-wife, Le Hoang Diep Thao, so she is no longer a shareholder of the group.

Eight business fields to suffer most from Covid-19
Eight business fields to suffer most from Covid-19
BUSINESSicon  19/02/2020 

Three major scenarios for economic development in 2020 have been drawn up by Can Van Luc and researchers from BIDV.

How will exchange rate and interest rate be affected amid Covid-19 outbreak?
How will exchange rate and interest rate be affected amid Covid-19 outbreak?
BUSINESSicon  19/02/2020 

SSI Research says the financial market in 2020 will be unpredictable and much less active than the forecasts released at the end of 2019.

Ride-hailing cars must display taxi signs
Ride-hailing cars must display taxi signs
BUSINESSicon  19/02/2020 

All cars providing passenger transportation services via ride-hailing applications will be treated like taxis from the beginning of April, when the pilot project for tech-based cars ends.

Clearer legal framework on certifying condotel and officetel projects
Clearer legal framework on certifying condotel and officetel projects
BUSINESSicon  19/02/2020 

The MoNRE has just issued a document to guide land-use regimes and ownership certification of non-residential construction, including condotel and officetel.

Hanoi hands out red books to foreigners
Hanoi hands out red books to foreigners
BUSINESSicon  18/02/2020 

Six foreign organisations and 35 foreigners were granted red books to purchase a number of apartments in Hanoi.

HSBC signals mass job cuts as profits plunge
HSBC signals mass job cuts as profits plunge
BUSINESSicon  18/02/2020 

Interim chief executive Noel Quinn reveals extensive job cuts and restructuring to shake up the bank.

Coronavirus triggers boom in private jet inquiries
Coronavirus triggers boom in private jet inquiries
BUSINESSicon  18/02/2020 

Private jet firms have seen a huge rise in people hoping to hire planes but they can't meet demand.

Groundwork laid for high-flying aviation
Groundwork laid for high-flying aviation
BUSINESSicon  18/02/2020 

With a number of notable changes taking effect this year, Vietnam is expected to see a big step in the development of its civil aviation industry.

 
 
 
Leave your comment on an article

OR QUICK LOGIN